NBA Discussing Withholding Player Salaries
Should the remainder of the NBA season be cancelled, players could see it affect their paychecks, according to a report from ESPN's Adrian Wojnarowski.
Sources told Wojnarowski that the league and the its Players' Association are "discussing scenarios for withholding up to 25 percent of players' remaining salaries in a league escrow should regular-season games eventually be cancelled."
Until now, the league has remained resolute in its belief that the season will return, and the league remains optimistic that the season could resume, according to Wojnarowski. But it is becoming increasingly unlikely that teams will complete all 82 games, and the league is clearly bracing for what could be a fairly significant financial hit.
Last week, Ben Golliver of The Washington Post reported that the current NBA hiatus could cost the league $1 billion, and The Athletic's John Hollinger and Danny Leroux estimated that the 2021 salary cap could dip by $8 million. That would put some teams in an unforeseen bind, triggering unplanned -- and, in some cases, exorbitant -- luxury tax payments. (The Hawks won't have to worry about crossing into the tax with their existing contracts, but could see their massive amount of cap space dwindle.) The league has the option of artificially smoothing the cap to prevent a massive one-time dip, and could likely work around potential luxury-tax complications if it chooses to do so.
The NBA's collective bargaining agreement includes a Force Majeure provision, which would cost players roughly one percent of their salary for each missed game. That clause is automatically put into effect if the league cancels games, and could also help prevent a drastic reduction of the salary cap.
NBA Commissioner Adam Silver and NBPA executive director Michele Roberts have "been discussing a number of ways to prepare financially for how the likely cancelling of scheduled games will impact some percentage of lost salary for players," according to Wojnarowski, but the league and the players' association have yet to agree on a specific solution. Players will receive their full paychecks on April 1, but the April 15 payment remains up in the air. If the two sides don't reach an agreement by April 15, the players would receive their full salaries, but would be required to pay back the money later depending on how many games are cancelled.
The NBA season has been suspended since March 11, when Rudy Gobert became the first player to test positive for the novel coronavirus. The league later announced the absence would last at least 30 days, but the rapid, exponential spread of COVID-19 will likely keep the league on pause far longer than that. Last week, Silver and other league executives took 20 percent pay cuts, which could portend a similar outcome for others throughout the league.
This is a complicated and constantly evolving situation that will take a while to resolve. Stay tuned.
